A recent widely-cited poll by PriceWaterhouseCoopers says that three-quarters of Americans want healthcare reform in President Obama’s first term. Such reform must reduce the cost of administering care, and many industry observers agree one way to achieve this is through higher levels of computerization. Over the past two months, Deal Radar has featured several companies that are using technology and automation to bring down costs in various aspects of the Healthcare industry, from running physicians’ offices to nurse staffing to clinical trials. Today, I draw your attention to Massachusetts-based WaveMark, a Healthcare IT provider.

The company describes its beginning as ‘serendipitous’. Co-founders Patrick Littlefield and John Wass met at an investor meeting where John was the subject matter expert assisting a venture firm in evaluating the idea Littlefield brought forward on trying to streamline the medical device supply chain. Recognizing the application of Radio Frequency Identification (RFID) as a potential solution to this problem, they began to work together to develop an RFID solution, WaveMark, in early 2004.

The company has solutions for both hospitals and suppliers and can be installed quickly; there is usually an 8- to 12-hour turnaround for most labs. Its solution leverages the power and flexibility of RFID and network technology to provide real-time inventory control. WaveMark aims to reduce on-hand inventory and eliminate overstocks and consigned materials while improving charge capture, thereby improving cash flow. Automated hands-free reporting of expiration dates addresses patient safety by enabling the efficient tracking and removal of expiring or recalled devices before they can be used in a procedure. Further, the automated tracking of lot and serial numbers allows recalls to be immediately located and removed before the device has a chance of reaching a patient.

WaveMark’s SaaS business model requires no upfront capital expenses, IT resources or maintenance from hospitals. Hospitals, which typically sign multi-year contracts, pay a monthly subscription fee for WaveMark’s Real-Time Inventory Management (RTIM) solution. The subscription fee includes a combination of hardware and software and is dependent upon the size and needs of a lab. Pricing is based on the number of products being tracked through WaveMark’s system.

WaveMark targets specialty areas within hospitals that use high-value implantable products often found in cardiovascular labs, electrophysiology labs, interventional radiology suites and operating rooms. It also works with hospital networks and with medical device suppliers that supply high-value, specialty items used in hospital labs. The company targets the $300 billion medical device portion of the world healthcare market.

Compared with other RFID initiatives that struggle to show a return on investment, according to the company, WaveMark customers report an ROI of over 200% within months of installation. Its customers range from small and midsized hospitals to leading medical centers in major metro areas. Its solutions are being deployed in 75 labs in 25 hospitals including Mercy Medical Center, Des Moines, Iowa; Florida Hospital, Orlando, Florida; and University Hospital, Chicago, Illinois. The company is also working with several major medical device suppliers by outfitting their field salesforces with a mobile solution to track inventory as well as hospital accounts.

The company has raised nearly $16 million so far: a $9.5 million Series A led by Loeb Investment Partners and SRK Management Company in 2006; and a $6.3 million Series B from the same investors. The latest round of funding is to bring the company to profitability in 2009.

Though WaveMark has not yet reached cash flow break even, it is in a strong growth phase. Its Health Care Provider (HCP) subscription revenues grew almost 150% in Q3-2008 YTD compared with the same period in 2007. In 2008 WaveMark brought in some of its largest deployments. The company expects that it could be an attractive acquisition target or could go public if the IPO market stabilizes at a later date, but for now, the focus is on execution.

Comments

New technology is definitely impacting companies such as WaveMark. Other healthcare applications of RFID include; tagging patient wristbands with ID and care information and managing the distribution of patient medications. Just this month the company announced that its clinical inventory management solution was selected by Tufts Medical Center (Boston, MA). According to BusinessWeek Tufts will use WaveMark’s RTIM technology to track physician preference items in its world-renowned Adult and Pediatric Cath, EP, and Interventional Radiology departments. It is expected that Tuft’s Cardiac Program will use WaveMark’s RFID-enabled inventory management solution.

Erika ValdezWednesday, July 1, 2009 at 5:46 PM PT

Looks like they need some help with develpoing new business, shortening sales cycles so they can stop depending on investor dollars. I'd be wary..